MUMBAI/HONG KONG, July 22 (Reuters) - BP's (BP.L) woes may
enable India to get the upper hand over China for at least one
coveted energy asset.

India's state-run Oil and Gas Natural Corp (ONGC.BO) is
well-positioned to buy the embattled UK firm's 35 percent
stake, worth $966 million by one estimate, in an offshore
Vietnamese gas field in which it already owns 45 percent.

China's CNOOC (0883.HK) (CEO.N) and Sinopec (0386.HK)
(600028.SS) (SNP.N), and Thailand's PTTEP (PTT.BK) are also
likely to show interest in BP's stake, bankers and analysts
familiar with the asset told Reuters last week, although ONGC's
presence in the project gives it an edge.

A deal would be a welcome change for India, which has been
playing the underdog to China in the hunt for natural resources
as the two Asian countries seek energy security to feed fast
economic growth.

Hanoi insists BP give priority to its partners in the
project.

BP is scrambling to raise billions to pay for the Gulf of
Mexico disaster, the worst oil spill in U.S. history, and ONGC
and PetroVietnam, which owns the rest of the project, are
waiting to pounce and capitalise on the British giant's
vulnerability.

India, whose plodding approach to overseas deals has
allowed other targets to slip away, appears to be moving
quickly this time to clinch a deal.
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"In principle, he has agreed to our proposal. Now we have
to negotiate with BP," said Deora, who is in Vietnam along with
other government officials and executives from Indian oil and
gas firms to boost ties in the energy sector.

"ONGC has been looking at assets globally, and they haven't
had much success over the last 12 to 18 months," said Atul
Rastogi, analyst at Daiwa Securities SMBC Co Ltd.

"They already have a stake, they know the field, they know
the asset, so in that sense it's probably better than going to
a completely new area," Rastogi said of Nam Con Son.

GOVERNMENT CONNECTIONS

ONGC's plan to form a joint venture with PetroVietnam could
help it secure a deal, a source who has advised ONGC on
previous M&A transactions told Reuters.

ONGC has yet to mandate banks to advise it on its interest
in BP's stake. Bankers, some experts say, are unlikely to be
closely involved in a deal as the companies and governments may
work out a structure on their own.

"The deal is likely to be played out between these
government-run companies," the source said.

The person was not authorised to speak publicly about the
matter and declined to be named.

A BP spokesman said the company was "exploring divestment
options" for its interest in the Nam Con Son gas project, which
comprises stakes in the Lan Tay and Lan Do gas fields, the Nam
Con Son pipeline and the Phu My power generation project.

As of late Thursday, it was still unclear what structure
the bid from ONGC will take.

"We may take Oil India and GAIL with us. Modalities are
being worked out. We may partner PetroVietnam. It all depends
on discussions and negotiations," Sharma told Reuters from
Vietnam.

India's plodding state energy and mining firms are trying
to raise their game. Firms such as ONGC, Coal India and Indian
Oil Corp (IOC.BO) have been promised more autonomy as they look
overseas for deals.

"A lot of pressure is coming from the government of India
because, strategically, they have to reduce dependence on
imports, and like China one way is to acquire stakes in assets
abroad," Rastogi said.

"But they have been slow. Part of the reason is they have
to get government approval... and they've lacked the
flexibility to go out and bid aggressively."
(Additional reporting by Nidhi Verma in NEW DELHI; Editing by
Tony Munroe and Anshuman Daga)